SST lowers first quarter outlook

March 12, 2001–Sunnyvale, California–Silicon Storage Technology, Inc. (SST) announced today that revenue, product gross margin,and earnings per share for the first quarter of 2001 will be significantly lower than previously expected, due to the deteriorating economy and inventory corrections that are continuing to constrain demand for technology products.

SST initially experienced a sharp downturn in several of its markets late in the fourth quarter of 2000, as its customers reacted to weakening demand and higher inventories. Market conditions have not improved during the quarter and customers have continued to return product, cancel backlog, or push out shipments. The result to SST is extremely limited visibility for the near-term.

Consequently, SST expects that first quarter revenue will be approximately $75 million to $85 million. The company also said that it is experiencing softness in average selling prices of some of its products, and as a result product gross margins are expected to be approximately 35%. These reductions are expected to result in earnings per share of between $0.05 and $0.10.

SST is continuing its strong focus on the development of new products and the cost reduction of existing products, along with continued expansion of its licensing relationships and securing the wafer foundry capacity with deep submicron geometries. “In spite of the current dismal economic conditions, we are confident of SST’s long-term ability to continue to grow and expand market share,” says Bing Yeh, president and CEO of SST. “As we continue to take steps to manage our expenses, the strength of our balance sheet gives SST the ability to maintain strategic levels of R&D investments. These investments are focused in areas that increase our competitiveness and efficiency, including the development of several high density application-specific memory products and the continued push toward 0.25-micron and 0.18-micron production.”

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